Yahoo Finance John Lewis warns over more shop closures after first annual loss
The John Lewis Partnership (JLP) has warned over further department store closures after the pandemic sent it plunging to its first ever annual loss.
The group, which also owns upmarket grocery chain Waitrose, said it does not expect all its John Lewis shops to reopen at the end of lockdown but that closures and job losses could have been more severe without Government business rates relief.
It came as the company confirmed that its partners would not receive an annual bonus for the first time in 68 years.
JLP also said it expects results to get worse over the current financial year as it continues its major shake-up, warning staff that they are not expected to receive a bonus until 2022-23.
The retail giant did not say how many of its 42 John Lewis shops are under threat, confirming it was in talks with landlords and will make a final decision at the end of March.
Recent reports suggested another eight stores were earmarked to be shut, on top of eight announced in July.
The group confirmed the previously announced move to scrap its staff bonus after tumbling to a £517 million pre-tax loss for the year to January 30 against profits of £146 million the previous year.
It marked the first loss in the group’s history dating back to 1864.
The company said it does not intend to pay the bonus again until it posts a profit of £150 million.
Chairman Sharon White said: “There is no getting away from the fact that some areas can no longer profitably sustain a John Lewis store.
“Regrettably, we do not expect to reopen all our John Lewis shops at the end of lockdown, which will also have implications for our supply chain.
“We are currently in discussions with landlords and final decisions are expected by the end of March.
“We will do everything we can to lessen the impact and will continue to provide community funds to support local areas.”
The announcement signals that further jobs could be at risk, after 1,300 were impacted by store closures last summer.
A John Lewis spokesman said the group would always try to redeploy elsewhere in the business, with redundancies a “last resort”.
The group has come under scrutiny after holding onto state business rates relief, including from Waitrose, despite its supermarket stores continuing to trade with strong sales throughout the pandemic.
The group has been helped by £190 million in Government emergency support, including business rates relief and furlough for workers.
Many of Waitrose’s grocery rivals, including the six largest supermarket groups, have handed back relief payments and said they would not claim extended support offered in last week’s Budget.
Ms White told reporters on Thursday that JLP needed the funding to secure the future of more of its workers.
She said: “The last year has been an economic earthquake and we are incredible grateful for the government support to keep the business afloat.
“And without that we would have had to undergo a greater scale of restructuring which would have put the position of more workers at risk.”
John Lewis said its results will get worse in the current financial year as it looks to invest £800 million in the business as part of an overhaul to turn around its fortunes, which will only partially be offset by annual cost savings of £300 million.
“The coming year is a crucial one in our five-year turnaround of the partnership as we set ourselves back on the path of sustainable profit,” it said.
It slumped to the loss over the past year after taking massive writedowns on the value of its shops due to the coronavirus crisis, which has devastated Britain’s high street and shifted sales online.
Results laid bare the pain suffered in its department store arm, with like-for-like sales flat while earnings slumped 25% to £554 million.
But its Waitrose business saw comparable store sales rise 10% and earnings lift 8% to £1.1 million as its non-essential supermarket shops were allowed to stay open.
